Art,
Can't agree with you on gold demand. From what I have heard, coin sales have taken off considerably since the WTC tragedy. Depending on the dealer you talk to, demand is up 30 to 200%. Scared money? You bet, but because of the spread between spot and the ask price for gold coins (the premium), the coins seldom come back. Very nearly permanently removed from the market, a one way trip, because if prices stay within 25 bucks +/- of current POG its not worth the trouble and the premium loss to cash in ones gold coin "insurance".
If POG goes up more than that, then the bull market effect begins and coin buyers are just as likely to buy more as sell (the renowned buy at the top effect,ggg). BTW, the premium on coins has increased substantially from a few weeks ago.
Furthermore, jewelry demand for gold is not as significantly effected by gold price increases as one might think. While this seems counterintuitive, remember that manufacturers keep bare minimum quantities of product on hand when it is a commodity falling in price. They might not even keep an inventory but buy at spot! But an increasing commodity price causes some inventory to be kept and increased buying of future contracts to try and lock in the price if it is rising. This creates demand. Plus we have to realize that at US markups, the POG is a smaller component of the jewelry prices than one might imagine when buying a 14kt chain, for ex.
Having said all that bullish stuff, the TA is not so comforting short term. HUI came very close to closing below it's 9-19 gap (5 min chart). Having some chart site problems and can't get a good enough measure of that 9-19 gap to be sure (hard to see on "cheap charts", ggg). If this is the case, IMHO, the recent HUI H&S measure is for a drop to 64 or so. I'm not even going to talk about the (imperfect) Evening Star candle pattern.
If we have no further "events" short term to stir the gold market, that is, and I sure hope we don't.
Best Regards,
Roebear |
